The Vietnamese fast-moving consumer goods (FMCG) market is lagging in major cities, but growth remains robust in rural areas, where the market seems to have regained its momentum to see 5-6% year-on-year growth in 2019, according to market research firm Kantar Worldpanel in a recent report.

Coffee remains the most popular drink for out-of-home consumption in Vietnam. The Vietnamese fast-moving consumer goods market is expected to grow by 5%-6% this year 

Vietnam’s economy saw another strong year, with the gross domestic product posting the fastest growth rate since 2011 at 7.08% last year. The consumer price index has been kept under control below 4% for the fourth consecutive year.

The firm noted that the achievement was also reflected in the high domestic demand of Vietnamese consumers, with retail sales of consumer goods enjoying an increase of 12% in 2018.

In Urban 4 key cities, referring to Hanoi, the central coastal city of Danang, HCMC and the Mekong Delta city of Can Tho, the non-food sector recorded a positive performance, while dairy and packaged foods were still stagnant.

Meanwhile, a different picture has emerged in rural areas, with healthy growth across all sectors.

Kantar Worldpanel stated that 2018 was a stronger year for modern trade, marking an estimated 19% rise over the previous year.

“We are seeing modern channels such as minimarts, convenience stores and ecommerce evolving very fast, expanding their shopper base in urban areas. The development of modern trade is also boosted by the reinvention of big formats, hypermarkets and supermarkets, thanks to their efforts to better utilize the space available,” according to the report.

In rural areas, an increasing number of shoppers have a tendency to shop in larger street shops and explore hypermarkets and supermarkets.

The market researcher also pointed out some spotlights of the FMCG sector in 2018.

For example, people are going online more frequently, driving the exponential development of ecommerce. The firm forecast that online shopping will further thrive in the coming years.

The beauty care market delivered fast growth last year, thanks to greater adoption of diversified and advanced skincare routines among Vietnamese consumers. The firm expected the market to develop further, given the ongoing innovations to attract consumers.

Shoppers now visit more channels to serve different shopping purposes, especially younger groups. They also seek greater convenience and specialization in their path to purchase.

As such, retailers are adapting to meet the needs of omni-shoppers by proactively stretching their retail portfolio as well as upgrading their retail formats, according to the firm.

Though coffee remains the most popular drink for out-of-home consumption, many young people are great fans of milk tea in Vietnam.

The local FMCG market has become more innovative over time as manufacturers invest heavily in offering new products to consumers. However, the firm warned that it has become more challenging to grab consumers’ attention in today’s market.

SGT